2015 (2) TMI 964 - AT - Central Excise

CENVAT Credit - Notification No.214/86-CE - Denial of the credit on the ground that credit taken on inputs used for job work done for other unit is not admissible and confirmed the demand along with interest and imposed penalty - Held that - Considering the Tribunal's Larger Bench decision in the case of Sterlite Industries (2004 (12) TMI 108 - CESTAT, MUMBAI) and the Hon'ble High Court's judgement in the case of Hwashin Automotive India Pvt. Ltd. (2014 (9) TMI 444 - Madras High Court), I find that appellants have made out a prima facie case for waiver of dues arising out of the impugned order. Accordingly, the predeposit of duty along with interest and penalty is waived and its recovery is stayed during pendency of the appeal - Stay granted.

Summary

Issues:
1. Admissibility of modvat credit on inputs used in job work for another unit.
2. Applicability of Notification No.214/86-CE for taking credit on inputs used in intermediary products.
3. Interpretation of Tribunal's Larger Bench decision in Sterlite Industries case.
4. Consideration of High Court's judgment in Hwashin Automotive India Pvt. Ltd. case.

Analysis:
1. The appellants claimed modvat credit on inputs used in manufacturing final products as a job worker for another unit. The original authority denied the credit, stating it was inadmissible for job work done for a different unit, resulting in demand, interest, and penalty. The advocate argued that as manufacturers of bolts, nuts, and screws, they were eligible for credit under Notification No.214/86-CE for inputs used in job work for a sister concern, citing relevant legal precedents.

2. The advocate emphasized the common use of inputs for various job works and final product manufacturing. He relied on the Tribunal's Larger Bench decision in Sterlite Industries case and the High Court's judgment in Hwashin Automotive India Pvt. Ltd. case to support the appellants' claim for credit on inputs used in intermediary products cleared by the principal manufacturer. The Revenue's representative contested this, stating the appellants were not entitled to modvat credit under the exemption notification.

3. After hearing both sides, the judge referred to the Tribunal's decision in Sterlite Industries case and the High Court's ruling in Hwashin Automotive India Pvt. Ltd. case. The judge found that the appellants had established a prima facie case for waiving the dues from the impugned order. Consequently, the predeposit of duty, interest, and penalty was waived, and recovery stayed during the appeal's pendency, granting the appellants relief based on the legal precedents cited.

4. The judgment highlighted the significance of legal precedents in determining the admissibility of modvat credit on inputs used in job work and intermediary products, emphasizing the applicability of Notification No.214/86-CE. By considering relevant case laws and interpretations, the judge ruled in favor of the appellants, granting them relief from the demand and penalties imposed by the original authority. The decision underscored the importance of legal principles and precedents in resolving tax disputes and interpreting excise duty regulations.